Lack of storage space causes Delta rice loss

HCM CITY — The slow construction of a modern rice-storage system in the country has caused high post-harvest losses, according to industry insiders.

If provinces had modern silos and other facilities, post-harvest losses would fall by at least 3 per cent, equal to hundreds of millions of US dollar.

Poorly-equipped storage facilities cut losses by 1 and 2 per cent, experts have said.

Viet Nam harvests around 38 million tonnes of paddy rice annually with half coming from the country's rice-bowl, the Cuu Long (Mekong) Delta.

However, current storage facilities can contain 2 million tonnes. Most of the facilities were built in the 1980s with old, unsophisticated equipment that does not offer proper storage conditions.

Post-harvest losses arising from both drying and storing processes have climbed to 4 and 5 per cent of the country's total production, experts have said.

Because the rice-storage system has such low capacity and outdated equipment, Vietnamese rice producers are unable to store their rice until they can sell it at a decent price. They have to sell their rice as soon as it is harvested at unattractive rates.

Ambitious plan

The Ministry of Agriculture and Rural Development has carried out a VND7.62 trillion (US$390 million) plan under which a modern rice storage system will be built in the Mekong Delta between 2009 and 2010 to store up to 4 million tonnes of rice, according to Pham Van Tan of the Sub-institute of Agricultural Engineering and Post-Harvest Technology. The system, when completed, would include new storage with a combined capacity of 2.8 million tonnes and the existing storage chain, which would be repaired and upgraded, will meet required standards.

The new silos would be located near seaports in Long An, Dong Thap, An Giang provinces and Can Tho and HCM City for easy transportation, he said.

To encourage enterprises to participate in the development of the rice-storage construction plan, the Government has allowed builders to have access to bank loans with soft interest rates of 6.5 per cent per year. Equipment importers can get loans with a zero interest rate.

The investors are also exempted from paying land rental for the first five years after the new storage facilities are put into use.

With such attractive conditions, many enterprises in the Cuu Long (Mekong) Delta have got involved in the construction of rice storage facilities.

The Kien Giang Trade and Tourism Company typifies the trend. In April 2009, the company invested VND55 billion ($2.9 million) in the building of a 40,000-tonne storage in Tan Hiep District.

The Tra Vinh Food Company followed and started the construction of a rice storage in Cau Ke District's An Phu Commune in January this year.

The facility was invested with VND62 billion ($3.2 million) and has a designed capacity of 70,000 tonnes of rice.

Meanwhile, the Southern Food Corporation (Vinafood 2) in early 2009 announced that it would spend VND600 billion ($30.7 million) to build a chain of rice silos with a total capacity of 200,000 tonnes in Can Tho City's Thot Not rice market.

Investors in other provinces have also been active in building silos.

Since the Government launched its storage plan two years ago, development had been slow, with the deadline to build facilities coming in slightly more than month, Tan said.

In Dong Thap Province, of the delta's big rice producers, for instance, rice storage facility with a capacity of 30,000 tonnes has been built on schedule.

Vinafood 2's construction of silos in the Thot Not market is still completing land clearance procedures.

Another problem is that newly built storage facilities do not meet all necessary technical standards as required for a real silo, such as foundation height, ventilation, drying grounds, rice husking and polishing facilities and automatic packaging. They are built as simple sheds only.

Rice industry experts attributed the slow construction of rice storage facilities to several reasons, of which was a lack of capital.

Complicated procedures

Although the Prime Minister has asked banks to provide capital for storage investors, it has not been easy for them to get bank loans because of complicated procedures.

Obtaining land has been another obstacle since costs for renting land are a considerable burden for builders.

Truong Thanh Phong, chairman of the Viet Nam Food Association, said that the agency would not be able to implement a plan to increase its storage chain's capacity from current 3.5 million tonnes of rice to 4.3 million this year as it targeted.

Land clearance and capital were the biggest problems for the association's member companies, Phong said.

Despite such difficulties, experts have said more storage facilities must be built.

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